Transforming Transportation with UES

Steve Melito: Hey, welcome to New York State Manufacturing Now, the podcast powered by FuzeHub. I’m your host, Steve Melito, and today we are here with Mike Backman from UES. Mike, welcome to New York State Manufacturing Now.

Mike Backman: Hi, Steve. It’s great to be here.

Steve Melito: So Mike, tell us about UES. What do you do and what do you do better than anyone else?

Mike Backman: Sure. In a nutshell, we electrify vehicles. So especially trucks and buses for commercial fleets. And we do that by first engineering and then manufacturing. And then finally installing all the components and systems that make an electric vehicle. So that means electric motors and batteries and control electronics and chargers and so forth. The vehicles we electrify run the gamut from people transportation such as school buses and shuttle buses to work trucks for utilities such as gas or electric or cable, and also package delivery trucks like those brown UPS vans you see. The reasons fleets are doing this with us are quite varied. Some of them want to drive change by moving away from carbon- based fuels to reduce pollution. Others are motivated simply by operational efficiency. Because simply put, an electric truck or bus is much cheaper to maintain, much cheaper to fuel. So they do have a higher upfront cost, but that cost is dropping as volumes increase and our technology is improving, and there are also grants and incentives out there. So in a nutshell, we help businesses and in some cases government agencies who operate fleets of vehicles. We help make them cleaner and more efficient for their operational and financial benefit and also for environmental and human benefit. What was it? Second part of your question was what do we do better than anyone else?

Steve Melito: Yes, sir.

Mike Backman: So yeah, we focus on commercial vehicles, Steve. If you need an electric car, you can buy a Tesla, you can buy a Chevy Bolt or a Nissan Leaf. But if you run a business, a business with trucks or buses moving people or packages or equipment, then that vehicle’s an asset that needs to return on an investment. Some businesses out there want one or two vehicles, so they can make a PR statement about going green. Other customers are investing in electric because it is not only right for the communities they operate in, but it’s right for their businesses. And so that’s really where we excel. We place a lot of effort on something we call repower or conversions. That’s where we convert existing vehicles that fleets already own from gas or diesel. We’ve been driving those for a while and we take them and we convert them to electric.

Steve Melito: Very good. So Mike, why would you buy a conversion kit instead of a brand new electric vehicle?

Mike Backman: Yeah, it’s pretty simple. You get the same exact benefits for a fraction of the price. So you buy an electric truck for a couple of reasons, zero tailpipe emissions because it’s better for the environment and it’s healthier for the passengers on board and the community it operates within. You buy because it’s quiet, again, better for the passengers and the drivers and the community operates in. And you buy it because there’s a dramatic savings in fuel and maintenance. So with repower or conversions, you get those same exact benefits and to the same degree except it costs a fraction, maybe a third or certainly less than half. So we use the vehicle that customers already bought and paid for. The vehicle that they know how to fix, they know how to operate, it suits their business requirements, and we’re not putting vehicles into the landfill. Also, you can’t buy a new electric truck or bus for every use case. They’re still being introduced and the portfolio from the manufacturers are being filled out, so there’s no need to wait for a new vehicle that’s available either in your weight class or in your particular configuration. You already have vehicles that work and you can go electric by repowering them and then last, at least in this business climate, it’s less of a wait. If you’ve gone car shopping recently, you understand the cost of things and the wait for things. And if you’ve tried to shop for commercial vehicles like trucks of buses, it’s actually even worse. And that’s for a number of reasons, but they’re also more varied and more complicated, and the supply chain trying to serve lower quantities across smaller markets, it’s just more difficult. So lots of good reasons to convert your existing vehicle instead of spend money on a new electric vehicle.

Steve Melito: Makes sense. So Mike, you’ve had some great success stories. For example, New York City has deployed some school buses that use UES technology. Can you tell us about that project?

Mike Backman: Yeah, school buses, a super exciting area for us for a whole number of reasons. Mainly school buses are an exceptionally good fit for electrification. Those big yellow school buses you see driving around, they’re very fuel inefficient. Big yellow school bus gets a little more than six miles per gallon. Pretty bad, right? And big yellow buses are also large polluters. They’re mostly diesel. Smaller buses have gone to gas, but they’re all still internal combustion engines. And all these buses, regardless of size that operate in urban areas like New York City you mentioned, they don’t necessarily run a lot of miles on a daily basis, but they spend a lot of time in traffic, so they have a disproportionate impact to the communities that they operate in terms of pollution and noise because those engines are running whether the bus is moving or not. So the air quality in the bus isn’t great for students. The driving patterns of those buses in New York are well understood and they return to the same yard every night. So charging is easier. So school buses a perfect application for electrification, especially in New York City. It’s exciting for us. New York State has about 50,000 school buses, the most of any state in the country. And New York City in particular has about a fifth of that at about 10, 000 just in the five boroughs. So it’s a very good target. We’ve been working with many bus contractors in New York City. The notable first project we had was with Logan Bus Company. They were the first mover in this space. We applaud them. They are the largest New York City Department of Education school bus contractor. They run about 2, 500 buses. And being that large, they certainly understand the challenges of transforming their fleet to electric. They have to balance the costs, and most importantly, not let their student passengers down. We also work with other school bus companies in New York City. Pioneer Bus, Total Transportation, and a number of others. So all these companies have decided to incorporate repower or conversions as they’re sometimes called as a part of their strategy. And here’s why, Steve. An electric bus costs about $ 400,000 new, maybe a little bit less, maybe a little bit more depending how it’s configured. So a new electric bus, about $400, 000. A repower is about a third of that. Again, as I described before, all of the same exact benefits of operating cost reduction and zero tailpipe emissions. So the momentum towards electrification in New York City and the state is accelerating. It’s really an exciting market for us. As you may know, if you’ve been watching the news, New York City passed the bill, it was called Intro 455 in November that all buses in New York City are to be electric by 2035. And New York State, the governor proposed shortly after that that all school buses in New York state become electric by at 2035. But the very notable point is, while the fleet has to be electric by 2035, you can’t purchase an internal combustion engine bus after 2027. So that’s only five years away. And we see other wins towards electrification happening. If you’ve looked at the bipartisan infrastructure, a law that recently passed that allocates a lot of money to help fuel these transitions, no pun intended.

Steve Melito: Very good. So get on the bus while there’s time and time is ticking.

Mike Backman: Yeah.

Steve Melito: So UES is also partnered with United Parcel Service to begin converting UPS diesel trucks in New York City to an all electric platform. Can you tell us about that project?

Mike Backman: Yeah, we’ve been working with UPS, United Parcel Service for a while. The project began a number of years back, maybe seven or so years back where they were trying to build a fuel cell vehicle. Actually, we’re working with them for both fuel cell vehicles and battery electric vehicles, both in New York and California. But the genesis of the project was they were trying to build a fuel cell vehicle in California. They were really struggling to get a vehicle on the road with the folks they were working with. And we came in and re- engineered a fuel cell vehicle. And the outcome of that work evolved into a battery electric version of that vehicle, and then also a standard repower solution or a standard drive train or standard propulsion system, how you want to call it and so that’s when we transitioned from that project to a product. And that product is what we call Unique EV, and that’s the repower or conversion that we’ve been talking about. So the New York that you asked about, that’s been pretty exciting. We’ve been in daily active service with UPS for, I think over four years now. We continue to deploy vehicles for them. It’s been super successful in New York City. Like school buses, package delivery has lots of stops. Idle time at each stop. An easy charging strategy because the routes are well defined. We know where they park at night. So it’s a really good application. These UPS trucks in New York City can actually go days without charging because of the routes. If you live in New York City and you ever had to pause your conversation if you stood on a street corner while a loud truck came by or you ever saw a big puff of diesel smoke come out while you were standing on a street corner, you realize how welcome these electrified vehicles are.

Steve Melito: Sure. Good. So Mike, let’s change gears again and talk a little bit about how some New York State resources have helped UES. And one of the ways that you advanced your technology was by partnering with the Clean Energy Business Incubator program or CBIP to develop an EV energy storage system assembly. Can you tell us more about this?

Mike Backman: Yeah, we definitely have worked with CBIP at Stony Brook for a while. David Hamilton, who runs that group and his team do an amazing job there. And it’s definitely a crucible doing really great things in clean energy. We’re really grateful to be a part of that. So electric vehicles, our and all of them use a variety of energy storage systems. And the most obvious, and the common one we know of are batteries, but there are others like ultra capacitors, which are sometimes used in hybrids. And it turns out in many or most cases, especially with batteries, that these are the most expensive part of an electric vehicle. And since, as I mentioned at the beginning, we focus on larger vehicles like trucks and buses. We use a lot of batteries. So it’s a really critical component from performance, from cost, availability, supply chain, all of those things. So if you look at a battery box on one of these big school buses or one of these package deliveries or otherwise, they look like a big black box, but inside they’re composed of many, many individual cells. In the case of cars, like a Tesla or something like that, they’re literally thousands of these cells. In the case of heavy vehicles, and we use a slightly different approach, but there still can be hundreds of these individual cells. And it’s really important how all these cells are connected. You just don’t stuff them in like changing batteries in a flashlight. These are really high voltage systems and they use a lot of current and so even big wires and screws aren’t good enough to assemble these batteries. They need to be welded together. And this is a complicated step. And so in the effort to move more manufacturing into our facility and into New York and have control over quality supply chain performance and so forth, we wanted to embark on developing the technology to laser weld all of these battery cells and not just for batteries, we also work with ultra capacitors. We wanted to bring this capability, advanced manufacturing in- house. Doing this, of course, takes a lot of capital and we are grateful to say that a portion of this work is being funded by a grant awarded by FuzeHub through the New York State Innovation Fund, which is backed by the Empire State Development Division of Science. So we’re happy for that. This development will drive our technology, help improve our customers experience with the product, lower costs, but not only make product better, but since we’re bringing this in house, we’re also hiring people relative to this as well. So it’s a job creation benefit as well, helping the region move towards the benefit of electrification. So super happy working with CBIP.

Steve Melito: Great. There’s another connection as well. And this was one that FuzeHub made between UES and the New York State Pollution Prevention Institute or P2I. Can you tell us about that collaboration?

Mike Backman: Yeah, yeah. I told you the story about working with UPS. We had lots of projects. All of those projects have gone to products and ongoing programs now, but early on we needed to scientifically document and demonstrate the impact of electric trucks compared to their diesel powered counterparts. And intuitively, we all know there’s no tail pipe on the vehicle. It has to be better, but we needed real numbers and we also needed a broader analysis. Electricity is generated somewhere, the method of generation may be by fossil fuel. So there’s this notion or idea of well to wheel emission. So we needed smart third party to come in and help us do the math, do the analysis, and be credible. So again, FuzeHub, part of the New York State MEP or the manufacturing engineering partnership, FuzeHub connected us to the Pollution Prevention Institute, as you mentioned and that team there conducted the high level analysis of this and that research showed what we had hoped that compared to diesel powered vehicles, our Unique EV technology significantly reduces the emissions from medium duty trucks and buses that are operating and was super important to have this data to confirm those assumptions and I would say, as you mentioned, having a help from FuzeHub that the help had gone beyond just connections with the Pollution Prevention Institute. In our early days when we were more of an engineering focused company, we had to transition those developments from projects to products, and we had to turn into a manufacturing company. And our product, as I mentioned, the Unique EV system had to be produced in greater quantities as we took on new customers. It had to be produced at a lower price to be competitive. And of course it has to have perfect quality because when people get in their vehicles, they expect them to work each and every time. So we had to install new business systems and other resources to help us make this transition from a project engineering company to a manufacturing production company. So FuzeHub helped us with providing us with some build for scale New York funding, and that helped us move forward implementing some new business systems like an MRP ERP system. For the folks who don’t know that software which tracks where parts are, where labor is, where things are going, and it helps us run a tight ship, so to speak.

Steve Melito: Good. So Mike, let’s look ahead a little bit. New York State plans to phase out sales of most new internal combustion engine or ICE vehicles, beginning with cars and light duty trucks in 2035. How does that affect your business?

Mike Backman: Tweak the question a little bit. Before we talk about how it affects our business, let’s remind how it benefits everyone. So use the example before, no one has ever stood behind a big yellow bus or a truck as it’s pulling away from a stoplight and said, ” Boy, that puff of black smoke smells good.” Or, ” That’s so quiet.” If you live in any urban area, you’re used to these smells, you’re used to these noises. If you live in the five boroughs, you can hear in the morning, sounds of dozens of school buses or dozens of trucks leaving a depot at six o’clock in the morning. That’s just not pleasant. It’s not enjoyable. There’s a real quality of life issue that goes beyond the environmental component. And no fleet enjoys the financial consequences of internal combustion engines. So electric vehicles are about one third the cost to operate in terms of fuel and maintenance, and those are big significant things beyond the environmental impact. So it affects all of us in a really positive way. But your question to how it affects our business, we’re obviously encouraged by this because this is what we do. Companies are moving now. 2035 may seem like a long time away, but as mentioned, the electric school bus mandate in New York State is only five years away, right? Because 2027 is the last year to buy internal combustion engine powered school buses. So 2035 is far away, but 2027 really is not, particularly if you’re a business that runs assets that last maybe 10 years. So if you’re recently buying those things, that transition has to happen now. So New York State School Bus is making that change, but also New York City as well with the law. So we’re tooling up for it in a very big way. Customers and fleets are acting now because they need to get familiar with the new assets, they need to install charging, and they need to adopt these new things. So they’re already moving now. We’ve already moved into a new facility about six months ago, and we’re already planning our next expansion. We’re aggressively hiring across the board, not only in engineering and customer service and support, but in production as well. So for our business and others like us, these changes are positive.

Steve Melito: Excellent. Mike, last question. If demand for your product skyrockets, and it certainly seems like it could, how are you going to be able to scale up?

Mike Backman: So I think that answering this question starts with comparing how our repowers or conversions are compared with new vehicles. So when we repower or convert a vehicle, we build about a quarter to a third of a new bus. So two thirds to three quarters. We’re not manufacturing. We don’t need to manufacture bodies or windows or seats or bumpers or brakes. If you look at what’s going on now with new vehicle delays, and new bus delays and truck delays, it’s much more than electronic parts. The challenge of scaling up is considerably less when you’re repowering existing vehicles as opposed to building entirely new vehicles. So the challenge may not be as high as you’d think, although it’s definitely still there. Also, our business is focused on electric only. Other manufacturers who do a great job, by the way, other manufacturers of buses and trucks are making a transition from gas and diesel trucks that they’ve been building for 50 or 75 years, and those vehicles are shipping now and that’s paying their bills. So they need to run parallel production to make it through this transition from internal combustion engines to electrification. We are fortunate in that all we focused on is electric. So we don’t need to have two assembly lines going. So Unique EV, which is our retrofit, does not require engineers to do. In fact, many of our vehicles right now are being done by third party shops who install our pre- engineered kit. So what that means is scaling up can be done by what we’re developing now, which is an authorized dealer network. That means other companies, not ours, can buy or install our Unique EV Repower by themselves. So what that means is we don’t need to have conversions done in a mega factory far away like new vehicles are. Vehicles can be converted, local. A repower can be done by a local shop. So if you’re a school bus operator, for example, you don’t need to ship your bus back to the factory at the other side of the country. It’s possible that a local partner, in fact, maybe one you’re already working with that’s doing your maintenance or doing your service on your buses can do your conversions and repower. So answer to how we can scale up lies within a large third party authorized dealer network that can do the labor and the manufacturing of the components necessary are but a fraction of a new vehicle. So we think, and we hope that we’re positioned well for that.

Steve Melito: Mike, this has been a fantastic interview. Thanks so much for your time today,

Mike Backman: Steve, thank you so much for having me.

Steve Melito: Hey everybody. We’ve been talking to Mike Backman from UES, and as you’ve heard, there’s a lot happening with electrification, with this transition to cleaner, greener technologies. And if you’re part of the transportation industry, I want to tease you a little bit and say that FuzeHub is planning a transportation supply chain event later this year. I can’t tell you when, I can’t tell you where, but it’s coming. If you’re interested, reach out to us. Probably the easiest way is to email us at info@ fuzehub. com and I’ll be in touch to provide some more information. So on behalf of New York State Manufacturing Now and FuzeHub, this is Steve Melito signing off.